If managers make processing or selling decisions using incremental revenue/incremental cost approach, which of the following statements is TRUE?
A) The resulting budgeted product-line income statement under the sales value at splitoff method, will show each product to have a positive operating income.
B) The resulting budgeted product-line income statement under the physical measure method, will show each product to have a positive operating income.
C) The resulting budgeted product-line income statement under the constant gross margin NRV method, will show each product to have a positive (or zero) operating income.
D) Estimated net realizable method the resulting budgeted product-line income statement under the estimated NRV method, will show each product to have a zero operating income.
E) The resulting budgeted product-line income statement under the sales value at splitoff method, will show each product to have a negative operating income.

Question

Quizplus · Accepted Answer

The constant gross margin NRV (Net Realizable Value) method allocates joint costs to joint products in a way that ensures each product achieves a constant gross margin percentage of NRV. This approach can result in each product showing a positive (or zero) operating income, as it aims to maintain a consistent profitability ratio across all products.

If Managers Make Processing or Selling Decisions Using Incremental Revenue/incremental